The Government is investigating reported payments by generic producers to insure that inferior products passed Federal quality control inspections.

Price cuts by the multinational companies have been voluntary, in response to public indignation and counteroffers from generic producers.

To capitalize on its position as the sole generic producer of many of its products, returning to production quickly was a top priority, Mr. Mendelsohn said.

Ivax, another major generic producer, signed an agreement last year with Indiana Protein Technologies.

While drug companies argued for the protection of their intellectual property rights against, say, generic producers, the Internet is hobbling their efforts.

BMS also held the original paclitaxel license, but there are now multiple generic producers.

Brand-name companies have obtained 212 court injunctions against attempts by generic producers to gain licenses for their drugs.

Some industry executives say they fear the changes could also erode earnings by pushing consumers toward generic producers and reducing demand for the products of the chemical companies.

Hermann J. Strenger, Bayer's managing board chairman, said generic producers cut the company's drug earnings by 30 percent in 1988 and he expected a further erosion this year.

American diplomats and trade officials have been pressuring poor countries to avoid generic drugs, and Washington is trying to impose rules at the World Trade Organization that would cripple generic producers.